CASCO PHILIPPINE CHEMICAL CO., INC.

, petitioner,
vs.
HON. PEDRO GIMENEZ, in his capacity as Auditor General of the Philippines,
and HON. ISMAEL MATHAY, in his capacity as Auditor of the Central Bank, respondents.

Facts

The Central Bank of the Philippines passed a circular called the Foreign Exchange Margin Fee Law that fixed a 25% margin fee for
foreign exchange transactions. Later on, the Bank passed a supplementary memorandum listing importations exempted from the
payment of the margin fee.

Petitioner is engaged in the business of manufacturing synthetic resin glues used in the bonding of lumber, veneer and plywood.
Petitioner purchased foreign exchange of around Php34,000 for the first importation of urea and formaldehyde, components used in
the manufacture of resin glue, and Php6,000 for the second importation. After the passage of the above circular, petitioner sought a
refund of the amount equivalent to 25% of the fees paid for the importation of urea formaldehyde because they were relying on
Resolution no. 1529 passed by the Central Bank on November 3, 1959 stating that the importation of urea formaldehyde would be
exempted from the payment of the 25% margin fee.

However, the Auditor of the Bank refused to release the refund on the ground that the petitioner's separate importation of urea and
formaldehyde is not covered by the exemption declared in Resolution no. 1529. Petitioner contends that urea formaldehyde in the
said resolution must be construed to mean urea AND formaldehyde.

Issue

Whether “urea formaldehyde” in Resolution no. 1529 must be construed to mean “urea AND formaldehyd” .

Held

No. The resolution is quite clear in its omission of the word AND between urea and formaldehyde for they are completely distinct from
urea formaldehyde; the first two are raw materials while the last is a finished product used in the manufacture of resin glue.

Besides, if there was indeed a mistake in the printing of the bill, it must be fixed by curative legislation and not by judicial decree
because to do so would be an infringement on the doctrine of separation of powers.
G.R. No. L-23475 April 30, 1974

HERMINIO A. ASTORGA, in his capacity as Vice-Mayor of Manila, petitioner,

vs.
ANTONIO J. VILLEGAS, in his capacity as Mayor of Manila, THE HON., THE EXECUTIVE SECRETARY, ABELARDO SUBIDO,
in his capacity as Commissioner of Civil Service, EDUARDO QUINTOS, in his capacity as Chief of Police of Manila,
MANUEL CUDIAMAT, in his capacity as City Treasurer of Manila, CITY OF MANILA, JOSE SEMBRANO, FRANCISCO
GATMAITAN, MARTIN ISIDRO, CESAR LUCERO, PADERES TINOCO, LEONARDO FUGOSO, FRANCIS YUSECO, APOLONIO
GENER, AMBROCIO LORENZO, JR., ALFONSO MENDOZA, JR., SERGIO LOYOLA, GERINO TOLENTINO, MARIANO MAGSALIN,
EDUARDO QUINTOS, JR., AVELINO VILLACORTA, PABLO OCAMPO, FELICISIMO CABIGAO, JOSE BRILLANTES, JOSE
VILLANUEVA and MARINA FRANCISCO, in their capacities as members of the Municipal Board

Facts

Sen. Arturo Tolentino passed House Bill No. 9266, which became Republic Act 4065, "An Act Defining the Powers, Rights and Duties of
the Vice-Mayor of the City of Manila, Further Amending for the Purpose Sections Ten and Eleven of Republic Act Numbered Four
Hundred Nine, as Amended, Otherwise Known as the Revised Charter of the City of Manila."

The bill was passed to the Senate Committee on Municipal Governments, Provinces and Cities headed by Sen. Gerardo Roxas for
approval. The bill was approved with minor amendments introduced by Sen. Roxas.

Afterwards, the bill was read for the third time where Sen. Tolentino proposed major amendments, which were approved by the
Senate. Later on, copies of the bill were printed and signed by the Senate President, the House Speaker and the President.

However, it was later found out through the legislative journal that only the Roxas amendments were incorporated in the enrolled bill
and the major amendments proposed by Tolentino were not included. The Senate President, House Speaker and President promptly
withdrew their signatures and consequently invalidated the bill. Therefore, petitioner could not be allowed to exercise the powers that
were supposed to be conferred upon him by the invalidated bill.

Issue

Whether the enrolled bill must always prevail over the legislative journal.

Held

Ordinarily, yes. However, when it is found that there are amendments or revisions that were recorded in the journal but were not
included in the enrolled bill, the Courts may declare the bill invalid by virtue of the records in the journal. Our laws adhere to the
Orthodox View on the Effect of Unconstitutional Statutes or Laws. Such laws, when invalidated or declared void, shall be struck from
statute books as if they have never been enacted. As was held in Norton vs. Shelby, an unconstitutional statute confers no rights,
imposes no duties and affords no protection – it will be as if no such law has ever existed.
G.R. No. 129783 December 22, 1997
MARCELINO C. LIBANAN, petitioner,
vs.
HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL and JOSE T. RAMIREZ, respondents.

Facts: Libanan filed election protest before HRET claiming that May 8, 1995 Eastern Samar elections were marred with irregularities.
Petitioner claimed that absence of thumb mark or signature of BEI at the back of a ballot rendered the ballot spurious.

Issue: Whether the absence of BEI's signature makes the ballot spurious; The true intent of law

Held: No, the absence of BEI's signature does not make the ballot spurious.

The pertinent provision of the law, Section 24 of R.A. No. 7166, provides:
Sec. 24. Signature of Chairman at the back of Every Ballot. — In every case before delivering an official ballot to the voter, the
Chairman of the Board of Election Inspector shall, in the presence of the voter, affix his signature at the back thereof. Failure to
authenticate shall be noted in the minutes of the Board of Election Inspectors and shall constitute an election offense punishable
under Section 263 and 264 of the Omnibus Election Code.

There is really nothing in the above law to the effect that a ballot which is not so authenticated shall thereby be deemed spurious.
The law merely renders the BEI Chairman accountable for such failure. The courts may not, in the guise of interpretation, enlarge the
scope of a statute and embrace situations neither provided nor intended by the lawmakers. Where the words and phrases of a statute
are not obscure and ambiguous, the meaning and intention of the legislature should be determined from the language employed, and
where there is no ambiguity in the words, there should be no room for construction.

RA No. 7166 was a consolidation of 2 house bills: H.B. 34639 and H.B. No. 34660. Section 22 of the two latter bills provided that:
In every case before delivering an official ballot to the voter, the chairman of the Board of Election Inspectors shall, in the presence of
the voter, affix his signature at the back thereof. Any ballot which is not so authenticated shall be deemed spurious. Failure to so
authenticate shall constitute an election offense.

During the deliberation of the Committee on Suffrage and Electoral Reforms, held on 08 August 1991, the members agreed to delete
the phrase "Any ballot which is not so authenticated shall be deemed spurious" to give way to real the intent of the law which was to
punish the BEI and not to disenfranchise the voter.

Thus the final draft, which was later to become R.A. No. 7166, no longer included the provision

PEOPLE VS. JABINAL

55 SCRA 607, G.R. NO. L-30061
27 FEBRUARY 1974
ANTONIO, J.
FACTS: Accused Jabinal was found guilty of the crime of Illegal Possession of Firearms and
Ammunition. During the time he was caught, the prevailing doctrine was that on
Macarandang and Lucero.
The accused, on trial, admitted that he was in possession of the revolver and the
ammunition described without license or permit. However, he claims that though he had no
license or permit, he had an appointment as Secret Agent from the Provincial Governor of
Batangas and an appointment as Confidential Agent from the PC Provincial Commander and
said appointments expressly carried with them the authority to possess the firearm in
question.
ISSUES: Whether or not Jabinal is to be found guilty owing to his reliance on the doctrines set
forth in People vs. Macarandang and People vs. Lucero.

PEOPLE VS. MANANTAN

115 PHIL 657, G.R. NO. L-14129
31 JULY 1962
REGALA, J.
FACTS: Guillermo Manantan was charged with a violation of Section 54 of the Revised Election Code which provides that “no justice,
judge, fiscal, treasurer, or assessor of any province x x x shall aid any candidate, or exert any influence in any manner in any election
or to take part therein, except to vote x x x”.
Manantan argues that he, a justice of the peace, is not comprehended among the officers enumerated in the law. He further
contends that a perusal of the history of the Revised Election Code will show that since Section 449 of the Revised Administrative
Code which governed such an infraction included “justice of the peace” in its enumeration while omitted in the Revised Election Code
shows the intention of the Legislature to exclude “justice of the peace from its operation.
ISSUES: Whether a “justice of the peace” is included in the prohibition contained in Section 54 of the old Revised Election Code.
RULING: The Court ruled that Manantan’s argument is untenable in that it overlooks the fundamental fact that under the Revised
Administrative Code qualifies the word “judge” by the phrase “of First Instance” while the Revised Election Code does not. Justices of
the peace were expressly included in the Revised Administrative Code because the kinds of judges therein were specified whereas
the Revised Election Code makes no such distinction. Also, an examination of the history of these laws show that whenever the word
“judge” was qualified by the phrase “of the first instance,” the word “justice of the peace” would follow. However, if the law simply
said “judge,” the words “justice of the peace” were omitted.
The defendant likewise invokes the statutory construction rule of casus omissus pro omisso habendus est or that a person, object
or thing omitted from an enumeration must be held to have been omitted intentionally, was declared by the Supreme Court as
inapplicable to the case at bar. The rule can only be made to apply where the omission has been clearly establish, the fact of which is
belied by the fact that the legislature did not exclude or omit justices of the peace from the enumeration of officers precluded from
engaging in partisan political activities but rather merely called it by another name.
Its is for these reasons that the dismissal by the trial court is set aside and remanded for trial on the
merits.
U.S. VS. HART
26 PHIL 149, G.R. NO. 8848
21 NOVEMBER 1913
TRENT, J.
FACTS: Appellants Hart, Miller, and Natividad were arraigned and found guilty of vagrancy under Act No. 519. Prosecution based its
argument on the evidences presented showing that Hart pleaded guilty and was convicted of gambling two or three weeks before his
arrest on the vagrancy charge.
Defense showed that Hart and Dunn operated a hotel and saloon in Angeles which did business of P96,000 during its 19 months
before the trial. Hart was also the proprietor of a saloon in Tacondo, raised imported hogs which he sold to the Army garrison, and
had other businesses.
Act 519 divides section 1 into seven clauses separated by semi-colons, each clause enumerating a certain class of persons who,
within the meaning of the statue can be considered as vagrants.
ISSUES: Whether or not the legislative intended to limit the crime of vagrancy to those having “no visible means of support”
RULING: The prosecution relies on the argument that “visible means of support” does not apply to “every person found loitering about
saloons or dram shops or gambling houses”. In order for the clause “without visible means of support to qualify the fist clause, either
the comma after gambling houses would have been omitted, or else the comma after country would have been inserted.
The Court held that if the punctuation gives the statue a meaning which is reasonable and in apparent accord with the legislative
will, it may be used as an additional argument for adopting the literal meaning of the words of a statute as thus punctuated.
However, an argument based on punctuation alone is not conclusive on the court by itself and the court will not hesitate to change
the punctuation as necessary. To say that there are two classes of vagrants defined in par. 2, sec. 1 of Act 519 implies a lack of
logical classification which the Court is not inclined to uphold. The accused are thus acquitted, they having shown that they have
“visible means of support”.
G.R. No. 89604 April 20, 1990

ROQUE FLORES, petitioner,

vs.
COMMISSION ON ELECTIONS , NOBELITO RAPISORA, respondents.

Petitioner Roque Flores was proclaimed by the board of canvassers as having received the highest number of votes for kagawad in
the elections held on 28 March 1989, in Barangay Poblacion, Tayum, Abra, and thus became punong barangay in accordance with
Section 5 of Rep. Act No. 6679, providing in part as follows —

However, his election was protested by Nobelito Rapisora, herein private respondent, who placed second in the election with 463
votes, or one vote less than the petitioner. The Municipal Circuit Trial Court of Tayum, Abra, sustained Rapisora and installed him
as punong barangay in place of the petitioner after deducting two votes as stray from the latter's total. 1

Flores appealed to the Regional Trial Court of Abra, which affirmed the challenged decision in toto. Judge Francisco O. Villarta, Jr.
agreed that the four votes cast for "Flores" only, without any distinguishing first name or initial, should all have been considered
invalid instead of being divided equally between the petitioner and Anastacio Flores, another candidate for kagawad. The judge held
that the original total credited to the petitioner was correctly reduced by 2, to 462, demoting him to second place. 2

The petitioner then went to the Commission on Elections, but his appeal was dismissed on the ground that the public respondent had
no power to review the decision of the regional trial court. This ruling, embodied in its resolution dated 3 August 1989, 3 was
presumably based on Section 9 of Rep. Act No. 6679, which was quoted therein in full as follows:

Sec. 9. A sworn petition contesting the election of a barangay official may be filed with the proper municipal or metropolitan trial
court by any candidate who has duly filed a certificate of candidacy and has been voted for a barangay office within ten (10) days
after the proclamation of the result of the election. The trial court shall decide the election protest within (30) days after the filing
thereof. The decision of the municipal or metropolitan trial court may be appealed within ten (10) days from receipt of a copy thereof
by the aggrieved party to the regional trial court which shall decide the issue within thirty (30) days from receipt of the appeal and
whose decision on questions of fact shall be final and non-appealable. For purposes of the barangay elections, no pre-proclamation
cases shall be allowed.

In this petition for certiorari, the Commission on Elections is faulted for not taking cognizance of the petitioner's appeal and for not
ruling that all the four questioned votes should have been credited to him under the equity of the incumbent rule in Section 211(2) of
the Omnibus Election Code.

The Commission on Elections was obviously of the opinion that it could not entertain the petitioner's appeal because of the provision
in Rep. Act No. 6679 that the decision of the regional trial court in a protest appealed to it from the municipal trial court in barangay
elections "on questions of fact shall be final and non-appealable."

While supporting the dismissal of the appeal, the Solicitor General justifies this action on an entirely different and more significant
ground, to wit, Article IX-C, Section 2(2) of the Constitution, providing that the Commission on Elections shall:

(2) Exercise exclusive original jurisdiction over all contests relating to the elections, returns and qualifications of all elective regional,
provincial, and city officials, and appellate jurisdiction over all contests involving elective municipal officials decided by trial courts of
general jurisdiction, or involvingelective barangay officials decided by trial courts of limited jurisdiction. (Emphasis supplied.)

Decisions, final orders, or rulings of the Commission on election contests involving elective municipal and barangay offices shall be
final, executory, and not appealable.

His submission is that municipal or metropolitan courts being courts of limited jurisdiction, their decisions in barangay election
contests are subject to the exclusive appellate jurisdiction of the Commission on Elections under the afore-quoted section. Hence, the
decision rendered by the Municipal Circuit Trial Court of Tayum, Abra, should have been appealed directly to the Commission on
Elections and not to the Regional Trial Court of Abra.

The doctrine in that case of (Luison v. Garcia), although laid down under the 1935 Constitution, is still controlling under the present
charter as the interpretation by this Court of Article IX-C, Section 2(2). Accordingly, Section 9 of Rep. Act No. 6679, insofar as it
provides that the decision of the municipal or metropolitan court in a barangay election case should be appealed to the regional trial
court, must be declared unconstitutional.
We make this declaration even if the law has not been squarely and properly challenged by the petitioner. Ordinarily, the Court
requires compliance with the requisites of a judicial inquiry into a constitutional question. 5 In the case at bar, however, we feel there
is no point in waiting to resolve the issue now already before us until it is raised anew, probably only in the next barangay elections.
The time to resolve it is now, before such elections. We shall therefore disregard the technical obstacles in the case at bar so that the
flaw in Rep. Act No. 6679 may be brought to the attention of Congress and the constitutional defect in Section 9 may be corrected.

In taking this step, the Court does not disregard the fact that the petitioner was only acting in accordance with the said law when he
appealed the decision of the Municipal Circuit Trial Court of Tayum to the Regional Trial Court of Abra. That is what the statute
specifically directed in its Section 9 which, at the time the appeal was made, was considered constitutional. The petitioner had a light
to rely on its presumed validity as everyone apparently did. Even the Congress and the Executive were satisfied that the measure
was constitutional when they separately approved it after careful study. Indeed, no challenge to its validity had been lodged or even
hinted — not even by the public respondent — as to suggest to the petitioner that he was following the wrong procedure. In fairness
to him therefore, we shall consider his appeal to the Commission on Elections as having been made directly from the Municipal Circuit
Trial Court of Tayum, Abra, disregarding the detour to the Regional Trial Court.

Accordingly, we hold that the petitioner's appeal was validly made to the Commission on Elections under its "exclusive appellate
jurisdiction over all contests. . . involving elective barangay officials decided by trial courts of limited jurisdiction." Its decision was in
turn also properly elevated to us pursuant to Article IX-A, Section 7, of the Constitution, stating that "unless otherwise provided by
this Constitution or by law, any decision, order or ruling of each Commission may be brought to the Supreme Court on certiorari by
the aggrieved party within thirty days from receipt of a copy thereof."

Obviously, the provision of Article IX-C, Section 2(2) of the Constitution that "decisions, final orders, or rulings of the Commission on
election contests involving elective municipal and barangay offices shall be final, executory, and not appealable" applies only to
questions of fact and not of law. That provision was not intended to divest the Supreme Court of its authority to resolve questions of
law as inherent in the judicial power conferred upon it by the Constitution. 6 We eschew a literal reading of that provision that would
contradict such authority.

The issue the petitioner was raising was one of law, viz., whether he was entitled to the benefits of the equity-of-the-incumbent rule,
and so subject to our review. This issue was not resolved by the public respondent because it apparently believed itself to be without
appellate jurisdiction over the decision of the Regional Trial Court of Abra. Considering that the public respondent has already
manifested its position on this issue, as will appear presently, the Court will now rule upon it directly instead of adopting the round-
about way of remanding the case to the Commission on Elections before its decision is elevated to this Court.

Implementing Rep. Act No. 6679, the Commission on Elections promulgated Resolution No. 2022-A providing in Section 16(3) thereof
that:

Incumbent Barangay Captains, whether elected, appointed or designated shall be deemed resigned as such upon the filing of their
certificates of candidacy for the office of "Kagawad," which is another office, for the March 28, 1989 barangay election.

This was the reason why the Municipal Circuit Trial Court of Tayum, Abra, held that the four questioned votes cast for Flores could not
be credited to either Roque Flores or Anastacio Flores and should have been regarded as stray under Section 211(1) 7 of the Omnibus
Election Code. Rejecting the petitioner's claim, the court held that Roque Flores was not entitled to any of the four contested votes
because he was not incumbent as punong barangay (or barangay captain, as the office was formerly called) on the date of the
election.

The petitioner insists on the application to him of Section 211(2) of the Code, stating pertinently that:

2. . . . If there are two or more candidates with the same full name, first name or surname and one of them is the incumbent, and on
the ballot is written only such full name, first name or surname, the vote shall be counted in favor of the incumbent.

because he should not have been considered resigned but continued to be entitled to the office of punong barangay under Section 8
of Rep. Act No. 6679, providing as follows:

Sec. 8. Incumbent elective officials running for the same office shall not be considered resigned upon the filing of then, certificates of
candidacy. They shall continue to hold office until their successors shall have been elected and qualified.

The petitioner contends that the afore-quoted administrative regulation is inofficious because the forfeiture prescribed is not
authorized by the statute itself and beyond the intentions of the legislature. Moreover, the enforcement of the rule would lead to
discrimination against the punong barangay and in favor of the otherkagawads, who, unlike him, could remain in office while running
for re-election and, additionally, benefit from the equity-of-the-incumbent rule.

Alternatively, the petitioner argues that, assuming the regulation to be valid he was nonetheless basically also akagawad as he was a
member of the sangguniang barangay like the other six councilmen elected with him in 1982. In fact, Section 5 of the Rep. Act No.
6679 also speaks of seven kagawads, the foremost of whom shall again be the punong barangay. He concludes that he should thus
be regarded as running for the same office — and therefore not considered resigned — when he filed his certificate of candidacy
for kagawad.

The Court does not agree.

It seems to us that the challenged resolution quite clearly expresses the mandate of the above-quoted Section 8 that all incumbent
elected officials should not be considered resigned upon the filing of their certificates of candidacy as long as they were running for
the same position. The purpose of the resolution was merely to implement this intention, which was clearly applicable not only to the
ordinary members of the sangguniang barangay but also to the punong barangay.

As for the questioned authority, this is found in Section 52 of the Omnibus Election Code, which empowers the public respondent to
"promulgate rules and regulations implementing the provisions of this Code or other laws which the Commission is required to
enforce and administer. . . ."

The justification given by the resolution is that the position of punong barangay is different from that of kagawad— as in fact it is.
There should be no question that the punong barangay is an essentially executive officer, as the enumeration of his functions in
Section 88 of the Local Government Code will readily show, unlike the kagawad, who is vested with mainly legislative functions
(although he does assist the punong barangay in the administration of the barangay). Under Rep. Act No. 6679, the person who wins
the highest number of votes as a kagawadbecomes by operation of law the punong barangay, or the executive of the political unit. In
the particular case of the petitioner, it should be noted that he was in fact not even elected in 1982 as one of the six councilmen but
separately as the barangay captain. He was thus correctly deemed resigned upon his filing of a certificate of candidacy
for kagawad in 1989, as this was not the position he was holding, or was incumbent in, at the time he filed such certificate.

It is worth stressing that under the original procedure followed in the 1982 barangay elections, the petitioner was elected barangay
captain directly by the voters, separately from the candidates running for mere membership in the sangguniang barangay. The
offices of the barangay captain and councilmen were both open to the candidates, but they could run only for one or the other
position and not simultaneously for both. By contrast, the candidate under the present law may aspire for both offices, but can run
only for one, to wit, that of kagawad. While campaigning for this position, he may hope and actually strive to win the highest number
of votes as this would automatically make him the punong barangay. In this sense, it may be said that he is a candidate for both
offices. Strictly speaking, however, the only office for which he may run — and for which a certificate of candidacy may be admitted
— is that of kagawad.

It follows that the petitioner cannot insist that he was running not for kagawad only but ultimately also for punong barangay in the 28
March 1989 election. In fact, his certificate of candidacy was for kagawad and not for punong barangay. As the basic position being
disputed in the barangay election was that of kagawad, that of punong barangay being conferred only by operation of law on the
candidate placing first, the petitioner had to forfeit his position of punong barangay, which he was holding when he presented his
candidacy for kagawad. Consequently, he cannot be credited with the four contested votes for Flores on the erroneous ground that
he was still incumbent as punong barangay on the day of the election.

The petitioner argues that he could not have run for reelection as punong barangay because the office was no longer subject to
separate or even direct election by the voters. That may be so, but this argument goes to the wisdom of the law, not its validity, and
is better addressed to the legislature. From the strictly legal viewpoint, the statute does not offend the equal protection clause, as
there are, to repeat, substantial distinctions between the offices of punong barangay and kagawad. Precisely , the reason for
divesting the punong barangay of his position was to place him on the same footing as the other candidates by removing the
advantages he would enjoy if he were to continue as punong barangay while running for kagawad.

In sum, we hold that Section 9 of Rep. Act No. 6679 is constitutionally defective and must be struck down, but the challenged
resolution must be sustained as a reasonable and valid implementation of the said statute. The petitioner was no longer the
incumbent punong barangay on election day and so was not entitled to the benefits of the equity-of-the-incumbent rule. The
consequence is that the four votes claimed by him were correctly considered stray, making the private respondent the punong
barangay of Poblacion, Tayum, Abra, for having received the highest number of votes for kagawad.

It remains to stress that although the elections involved herein pertain to the lowest level of our political organization, this fact has
not deterred the highest tribunal from taking cognizance of this case and discussing it at length in this opinion. This only goes to
show that as long as a constitutional issue is at stake, even the barangayand its officers, for all their humility in the political
hierarchy, deserve and will get the full attention of this Court.

WHEREFORE, the petition is DISMISSED. Judgment is hereby rendered:

1. Declaring Section 9 of Rep. Act No. 6679 UNCONSTITUTIONAL insofar as it provides that barangay election contests decided by the
municipal or metropolitan trial court shall be appealable to the regional trial court;

2. Declaring valid Section 16(3) of Com. Res. No. 2022-A dated January 5, 1989; and

3. Declaring private respondent Nobelito Rapisora the duly elected punong barangay of Poblacion, Tayum, Abra.

No pronouncement as to costs. SO ORDERED.

G.R. No. 132593 June 25, 1999

PHILIPPINE INTERNATIONAL TRADING CORPORATION, petitioner,

vs.
COMMISSION ON AUDIT, respondent.
GONZAGA-REYES, J.:

This is a petition for certiorari under Rule 64 of the 1997 Rules of Civil Procedure to annul Decision No. 2447 dated July 27, 1992 of
the Commission on Audit (COA) denying Philippine International Trading Corporation's (PITC) appeal from the disallowances made by
the resident COA auditor on PITC's car plan benefits; and Decision No. 98-048 dated January 27, 1998 of the COA denying PITC's
motion for reconsideration.

The following facts are undisputed:

The PITC is a government-owned and controlled corporation created under Presidential Decree (PD) No. 252 on July 21, 1973 1,
primarily for the purpose of promoting and developing Philippine trade in pursuance of national economic development. On October
19, 1988, the PITC Board of Directors approved a Car Plan Program for qualified PITC officers. 2 Under such car plan program, an
eligible officer is entitled to purchase a vehicle, fifty percent (50%) of the value of which shall be shouldered by PITC while the
remaining fifty percent (50%) will be shouldered by the officer through salary deduction over a period of five (5) years. Maximum
value of the vehicle to be purchased ranges from Two Hundred Thousand Pesos (P200,000.00) to Three Hundred and Fifty Thousand
Pesos (P350,000.00), depending on the position of the officer in the corporation. In addition, PITC will reimburse the officer concerned
fifty percent (50%) of the annual car registration, insurance premiums and costs of registration of the chattel mortgage over the car
for a period of five (5) years from the date the vehicle was purchased. The terms and conditions of the car plan are embodied in a
"Car Loan Agreement". 3 Per PITC's car plan guidelines, the purpose of the plan is to provide financial assistance to qualified
employees in purchasing their own transportation facilities in the performanced of their work, for representation, and personal
use. 4 The plan is envisioned to facilitate greater mobility during official trips especially within Metro Manila or the employee's
principal place of assignment, without having to rely on PITC vehicles, taxis or cars for hire. 5

On July 1, 1989, Republic Act No. 6758 (RA 6758), entitled "An Act Prescribing a Revised Compensation and Position Classification
System in the Government and For Other Purposes", took effect. Section 12 of said law provides for the consolidation of allowances
and additional compensation into standardized salary rates save for certain additional compensation such as representation and
transportation allowances which were exempted from consolidation into the standardized rate. Said section likewise provides that
other additional compensation being received by incumbents as by of July 1, 1989 not integrated into the standardized salary rates
shall continue to be authorized.

Sec. 12, RA 6758, reads —

Sec. 12. Consolidation of All Allowances and Compensation. — All allowances, except for representation and transportation
allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and
hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation
not otherwise specified herein as may be determined by the DBM, shall be deemed included in the standardized salary rates herein
prescribed. Such other additional compensation, whether in cash or in kind, being received by incumbents only as of July 1, 1989 not
integrated into the standardized salary rates shall continue to be authorized.

To implement RA 6758, the Department of Budget and Management (DBM) issued Corporate Compensation Circular No. 10 (DBM-CCC
No. 10). Paragraph 5.6 of DBM-CCC No. 10 discontinued effective November 1, 1989, all allowances and fringe benefits granted on
top of basic salary, not otherwise enumerated under paragraphs 5.4 and 5.5 thereof.

Paragraph 5.6 of DBM-CCC No. 10 provides:

5.6 Payment of other allowances/fringe benefits and all other forms of compensation granted on top of basic salary, whether in cash
or in kind, not mentioned in Sub-paragraphs 5.4 and 5.5 6 above shall be discontinued effective November 1, 1989. Payment made for
such allowance/fringe benefits after said date shall be considered as illegal disbursement of public funds.

On post audit, the payment/reimbursement of the above-mentioned expenses (50% of the yearly car registration and insurance
premiums and 50% of the costs of registration of the chattel mortgage over the car) made after November 1, 1989 was disallowed by
the resident COA auditor. The disallowance was made on the ground that the subject car plan benefits were not one of the fringe
benefits or form of compensation allowed to be continued after said date under the aforequoted paragraph 5.6 of DBM-CCC No. 10 7,
in relation to Paragraphs 5.4 and 5.5 thereof.

PITC, on its behalf, and that of the affected PITC officials, appealed the decision of the resident COA auditor to the COA. On July 27,
1992, COA denied PITC's appeal and affirmed the disallowance of the said car plan expenses in the assailed Decision No. 2447 dated
July 27, 1992. Relevant portions of the decision read thus:

Upon circumspect evaluation thereof, this Commission finds the instant appeal to be devoid of merit. It should be noted that the
reimbursement/payment of expenses in question is based on the Car Plan benefit granted under Board Resolution No. 10-88-03
adopted by the PITC Board of Directors on October 19, 1988. The Car Plan is undeniably a fringe benefit as appearing in PITC's
"Compensation Policy under the heading "3. Other Fringe Benefits", particularly Item No. 3.13 thereof. Inasmuch as PITC is a
government-owned and/or controlled corporation, the grant of the Car Plan (being a fringe benefit) should be governed by the
provisions of Corporate Compensation Circular No. 10, implementing RA 6758. Under sub-paragraph 5.6 of said Circular, it explicitly
provides:

xxx xxx xxx

Since the Car Plan benefit is not one of those fringe benefits or other forms of compensation mentioned in Sub-paragraphs 5.4 and
5.5 of CCC No. 10, consequently the reimbursement of the 50% share of PITC in the yearly registration and insurance premium of the
cars purchased under said Car Plan benefit should not be allowed. . . . 8

PITC's motion for reconsideration was denied by the COA in its Resolution dated January 27, 1998. 9

Hence, the instant petition on the following grounds:

1. That the legislature did not intend to revoke existing benefits being received by incumbent government employees as of July 1,
1989 (including subject car plan benefits) when RA 6758 was passed;

2. That the Car Loan Agreements signed between PITC and its officers pursuant to PITC's Car Plan Program, including the Car Loan
Agreements, duly executed prior to the effectivity of RA 6758, constitute the law between the parties and as such, protected by
Section 10, Article III of the 1987 Philippine Constitution which prohibits the impairment of contracts; and

3. Finally, that the provisions of PD 985 do not apply to PITC inasmuch as under its Revised Charter, PD 1071, as amended by E.O.
756 and E.O. 1067, PITC is not only expressly exempted from OCPC rules and regulations but its Board of Directors was expressly
authorized to adopt compensation policies and other related benefits to its officers/employees without need for further approval
thereof by any government office, agency or authority. 10

The petition is meritorious.

First of all, we must mention that this Court has confirmed in Philippine Post Authority vs. Commission on Audit 11the legislative intent
to protect incumbents who are receiving salaries and/or allowances over and above those authorized by RA 6758 to continue to
receive the same even after RA 6758 took effect. In reserving the benefit to incumbents, the legislature has manifested its intent to
gradually phase out this privilege without upsetting the policy of non-diminution of pay and consistent with the rule that laws should
only be applied prospectively in the spirit of fairness and justice. 12 Addressing the issue as to whether the petitioners-officials may
still receive their representation and transportation allowance (RATA) at the higher rates provided by Letter of Implementation (LOI)
No. 97 in light of Section 12, RA 6758, this Court said:

Now, under the second sentence of Section 12, first paragraph, the RATA enjoyed by these PPA officials shall continue to be
authorized only if they are "being received by incumbents only as of July 1, 1989." RA 6758 has therefore, to this extent, amended
LOI No. 97. By limiting the benefit of the RATA granted by LOI No. 97 to incumbents, Congress has manifested its intent to gradually
phase out this privilege without upsetting its policy of non-diminution of pay.

The legislature has similarly adhered to this policy of non-diminution of pay when it provided for the transition allowance under
Section 17 of RA 6758 which reads:

Sec. 17. Salaries of Incumbents. — Incumbents of position presently receiving salaries and additional compensation/fringe benefits
including those absorbed from local government units and other emoluments the aggregate of which exceeds the standardized salary
rate as herein prescribed, shall continue to receive such excess compensation, which shall be referred to as transition allowance. The
transition allowance shall be reduced by the amount of salary adjustment that the incumbent shall receive in the future.

While Section 12 refers to allowances that are not integrated into the standardized salaries whereas Section 17 refers to salaries and
additional compensation or fringe benefits, both sections are intended to protect incumbents who are receiving said salaries and/or
allowances at the time RA 6758 took effect. 13 (Emphasis supplied.)

Based on the foregoing pronouncement, petitioner correctly pointed out that there was no intention on the part of the legislature to
revoke existing benefits being enjoyed by incumbents of government positions at the time of the virtue of Sections 12 and 17
thereof. There is no dispute that the PITC officials who availed of the subject car plan benefits were incumbents of their positions as of
July 1, 1989. Thus, it was legal and proper for them to continue enjoying said benefits within the five year period from date of
purchase of the vehicle allowed by their Car Loan Agreements with PITC.

Further, we see the rationale for the corporation's fifty percent (50%) participation and contribution to the subject expenses. As to the
insurance premium, PITC, at least, up to the extent of 50% of the value of the vehicle, has an insurable interest in said vehicle in case
of loss or damage thereto. As to the costs of registration of the vehicle in the employee's name and of the chattel mortgage in favor
of PITC, this is to secure PITC of the repayment of the "Car Loan Agreement" and the fulfillment of the other obligations contained
therein by the employee.

Still further, the vehicle being utilized by the officer is actually being used for corporate purposes because the officer concerned is no
longer entitled to utilize company-owned vehicles for official business once he/she has availed of a car plan. Neither is said officer
allowed to reimburse the costs of other land transportation used within his principal place of assignment (i.e. Metro Manila) as the
vehicle is presumed to be his official vehicle. 14 In the event that the employee resigns, retires or is separated from the company
without cause prior to the completion of the 60-month car plan, the employee shall be given the privilege to buy the car provided he
pays the remaining installments of the loan and the amount equivalent to that portion of the company's contribution corresponding to
the unexpired period of the car plan. On the other hand, if the employee has been separated from the company for cause, the
company has the other option aside from the foregoing to repossess the car from the employee, in which case, the company shall
pay back to the employee all amortizations already made by the employee to the company, interest free. 15
Secondly, COA relied on DBM-CCC No. 10 16 as basis for the disallowance of the subject car plan benefits. DBM-CCC No. 10 which was
issued by the DBM pursuant to Section 23 17 of RA 6758 mandating the said agency to issue the necessary guidelines to implement
RA 6758 has been declared by this Court in De Jesus, et al. vs.Commission on Audit, et al. 18 as of no force and effect due to the
absence of publication thereof in the Official Gazette or in a newspaper of general circulation. Salient portions of said decision read:

On the need publication of subject DBM-CCC No. 10, we rule in the affirmative. Following the doctrine enunciated in Tanada 19,
publication in the Official Gazette or in a newspaper of general circulation in the Philippines is required since DBM-CCC No. 10 is in the
nature of an administrative circular the purpose of which is to enforce or implement an existing law. Stated differently, to be effective
and enforceable, DBM-CCC No. 10 must go through the requisite publication in the Official Gazette or in a newspaper of general
circulation in the Philippines.

In the present case under scrutiny, it is decisively clear that DBM-CCC No. 10, which completely disallows payment of allowances and
other additional compensation to government officials and employees, starting November 1, 1989, is not a mere interpretative or
internal regulation. It is something more than that. And why not, when it tends to deprive government workers of their allowances
and additional compensation sorely needed to keep body and soul together. At the very least, before the circular under attack may
be permitted to substantially reduce their income, the government officials and employees concerned should be apprised and alerted
by the publication of said circular in the Official Gazette or in a newspaper or general circulation in the Philippines — to the end that
they be given amplest opportunity to voice out whatever opposition they may have, and to ventilate their stance on the matter. This
approach is more in keeping with democratic precepts and rudiments of fairness and transparency.

In the case at bar, the disallowance of the subject car plan benefits would hamper the officials in the performance of their functions to
promote and develop trade which requires mobility in the performance of official business. Indeed, the car plan benefits are
supportive of the implementation of the objectives and mission of the agency relative to the nature of its operation and responsive to
the exigencies of the service.

It has come to our knowledge that DBM-CCC No. 10 has been re-issued in its entirety and submitted for publication in the Official
Gazette per letter to the National Printing Office dated March 9, 1999. Would the subsequent publication thereof cure the defect and
retroact to the time that the above-mentioned items were disallowed in audit?

The answer is in the negative, precisely, for the reason that publication is required as a condition precedent to the effectivity of a law
to inform the public of the contents of the law or rules and regulations before their rights and interests are affected by the same.
From the time the COA disallowed the expenses in audit up to the filing of herein petition the subject circular remained in legal limbo
due to its non-publication. As was stated in Tanada vs.Tuvera, 21, "prior publication of laws before they become effective cannot be
dispensed with, for the reason that such omission would offend due process insofar as it would deny the public knowledge of the laws
that are supposed to govern it.

In view of the nullity of DBM-CCC No. 10 relied upon by the COA as basis for the disallowance of the subject car plan benefits, we
deem it unnecessary to discuss the second issue raised in the instant petition.

We deem it necessary though to resolve the third issue as to whether PITC is exempt from RA 985 22 as subsequently amended by RA
6758. According to petitioner, PITC's Revised Charter, PD 1071 dated January 25, 1977, as amended by EO 756 dated December 29,
1981, and further amended by EO 1067 dated November 25, 1985, expressly exempted PITC from the Office of the Compensation
and Position Classification (OCPC) rules and regulations. Petitioner cites Section 28 of P.D. 1071 23; Section 6 of EO 756 24; and Section
3 of EO 1067. 25

According to the COA in its Decision No. 98-048 dated January 27, 1998, the exemption granted to the PITC has been repealed and
revoked by the repealing provisions of RA 6758, particularly Section 16 thereof which provides:

Sec. 16. Repeal of Special Salary Laws and Regulations. — All laws, decrees, executive, orders, corporate charters, and other
issuances or parts thereof, that exempt agencies from the coverage of the System, or that authorize and fix position classifications,
salaries, pay rates or allowances of specified positions, or groups of officials, and employees or of agencies, which are inconsistent
with the System, including the proviso under Section 2 and Section 16 of PD No. 985 are hereby repealed.

To this, petitioner argues that RA 6758 which is a law of general application cannot repeal provisions of the Revised Charter of PITC
and its amendatory laws expressly exempting PITC from OCPC coverage being special laws. Our rules on statutory construction
provide that a special law cannot be repealed, amended or altered by a subsequent general law by mere
implication 26; that a statute, general in character as to its terms and application, is not to be construed as repealing a special or
specific enactment, unless the legislative purpose to do so is manifested 27; that if repeal of particular or specific law or laws is
intended, the proper step is to so express it. 28

In the case at bar, the repeal by Section 16 of RA 6758 of "all corporate charters that exempt agencies from the coverage of the
System" was clear and expressed necessarily to achieve the purposes for which the law was enacted, that is, the standardization of
salaries of all employees in government owned and/or controlled corporations to achieve "equal pay for substantially equal work".
Henceforth, PITC should now be considered as covered by laws prescribing a compensation and position classification system in the
government including RA 6758. This is without prejudice, however, as discussed above, to the non-diminution of pay of incumbents
as of July 1, 1989 as provided in Sections 12 and 17 of said law.

WHEREFORE, the Petition is hereby GRANTED, the assailed Decisions of the Commission on Audit are SET ASIDE.

SO ORDERED.
G.R. No. L-47757-61 January 28, 1980

THE PEOPLE OF THE PHILIPPINES, ABUNDIO R. ELLO, As 4th Assistant of Provincial Bohol VICENTE DE LA SERNA. JR., as
complainant all private prosecutor, petitioners,
vs.
HON. VICENTE B. ECHAVES, JR., as Judge of the Court of First Instance of Bohol Branch II, ANO DACULLO, GERONIMO
OROYAN, MARIO APARICI, RUPERTO CAJES and MODESTO S SUELLO,respondents.

AQUINO, J.:p

The legal issue in this case is whether Presidential Decree No. 772, which penalizes squatting and similar acts, applies to agricultural
lands. The decree (which took effect on August 20, 1975) provides:

SECTION 1. Any person who, with the use of force, intimidation or threat, or taking advantage of the absence or tolerance of the
landowner, succeeds in occupying or possessing the property of the latter against his will for residential, commercial or any other
purposes, shall be punished by an imprisonment ranging from six months to one year or a fine of not less than one thousand nor
more than five thousand pesos at the discretion of the court, with subsidiary imprisonment in case of insolvency. (2nd paragraph is
omitted.)

The record shows that on October 25, 1977 Fiscal Abundio R. Ello filed with the lower court separate informations against sixteen
persons charging them with squatting as penalized by Presidential Decree No. 772. The information against Mario Aparici which is
similar to the other fifteen informations, reads:

That sometime in the year 1974 continuously up to the present at barangay Magsaysay, municipality of Talibon, province of Bohol,
Philippines and within the jurisdiction of this Honorable Court, the above-named accused, with stealth and strategy, enter into,
occupy and cultivate a portion of a grazing land physically occupied, possessed and claimed by Atty. Vicente de la Serna, Jr. as
successor to the pasture applicant Celestino de la Serna of Pasture Lease Application No. 8919, accused's entrance into the area has
been and is still against the win of the offended party; did then and there willfully, unlawfully, and feloniously squat and cultivate a
portion of the said grazing land; said cultivating has rendered a nuisance to and has deprived the pasture applicant from the full use
thereof for which the land applied for has been intended, that is preventing applicant's cattle from grazing the whole area, thereby
causing damage and prejudice to the said applicant-possessor-occupant, Atty. Vicente de la Serna, Jr. (sic)

Five of the informations, wherein Ano Dacullo, Geronimo Oroyan, Mario Aparici, Ruperto Cajes and Modesto Suello were the accused,
were raffled to Judge Vicente B. Echaves, Jr. of Branch II (Criminal Cases Nos. 1824, 1828, 1832, 1833 and 1839, respectively).

Before the accused could be arraigned, Judge Echaves motu proprio issued an omnibus order dated December 9, 1977 dismissing the
five informations on the grounds (1) that it was alleged that the accused entered the land through "stealth and strategy", whereas
under the decree the entry should be effected "with the use of force, intimidation or threat, or taking advantage of the absence or
tolerance of the landowner", and (2) that under the rule of ejusdem generis the decree does not apply to the cultivation of a grazing
land.

Because of that order, the fiscal amended the informations by using in lieu of "stealth and strategy" the expression "with threat, and
taking advantage of the absence of the ranchowner and/or tolerance of the said ranchowner". The fiscal asked that the dismissal
order be reconsidered and that the amended informations be admitted.

The lower court denied the motion. It insisted that the phrase "and for other purposes" in the decree does not include agricultural
purposes because its preamble does not mention the Secretary of Agriculture and makes reference to the affluent class.

From the order of dismissal, the fiscal appealed to this Court under Republic Act No. 5440. The appeal is devoid of merit.

We hold that the lower court correctly ruled that the decree does not apply to pasture lands because its preamble shows that it was
intended to apply to squatting in urban communities or more particularly to illegal constructions in squatter areas made by well-to-do
individuals. The squating complained of involves pasture lands in rural areas.

The preamble of the decree is quoted below:

WHEREAS, it came to my knowledge that despite the issuance of Letter of Instruction No. 19 dated October 2, 1972, directing the
Secretaries of National Defense, Public Work. 9 and communications, Social Welfare and the Director of Public Works, the PHHC
General Manager, the Presidential Assistant on Housing and Rehabilitation Agency, Governors, City and Municipal Mayors, and City
and District Engineers, "to remove an illegal constructions including buildings on and along esteros and river banks, those along
railroad tracks and those built without permits on public and private property." squatting is still a major problem in urban
communities all over the country;

WHEREAS, many persons or entities found to have been unlawfully occupying public and private lands belong to the affluent class;

WHEREAS, there is a need to further intensify the government's drive against this illegal and nefarious practice.

It should be stressed that Letter of Instruction No. 19 refers to illegal constructions on public and private property. It is complemented
by Letter of Instruction No. 19-A which provides for the relocation of squatters in the interest of public health, safety and peace and
order.

On the other hand, it should be noted that squatting on public agricultural lands, like the grazing lands involved in this case, is
punished by Republic Act No. 947 which makes it unlawful for any person, corporation or association to forcibly enter or occupy public
agricultural lands. That law provides:

SECTION 1. It shall be unlawful for any person corporation or association to enter or occupy, through force, intimidation, threat,
strategy or stealth, any public agriculture land including such public lands as are granted to private individuals under the provision of
the Public Land Act or any other laws providing for the of public agriculture lands in the Philippines and are duly covered by the
corresponding applications for the notwithstanding standing the fact that title thereto still remains in the Government or for any
person, natural or judicial to investigate induce or force another to commit such acts.

Violations of the law are punished by a fine of not exceeding one thousand or imprisonment for not more than one year, or both such
fine and imprisonment in the discretion of the court, with subsidiary imprisonment in case of insolvency. (See People vs. Lapasaran
100 Phil. 40.)

The rule of ejusdem generis (of the same kind or species) invoked by the trial court does not apply to this case. Here, the intent of the
decree is unmistakable. It is intended to apply only to urban communities, particularly to illegal constructions. The rule of ejusdem
generis is merely a tool of statutory construction which is resorted to when the legislative intent is uncertain (Genato Commercial
Corp. vs. Court of Tax Appeals, 104 Phil. 615,618; 28 C.J.S. 1049-50).

WHEREFORE, the trial court's order of dismissal is affirmed. No costs.

SO ORDERED.

LINO ARTATES and MANUELA POJAS, plaintiffs-appellants, vs. DANIEL URBI, CRISANTO SOLIVEN G.R. No. L-29421 January
30, 1971

This is an appeal from the decision of the Court of First Instance of Cagayan (Civil Case No. 116-T), involving the public sale of a
homestead to satisfy a civil judgment against the grantee.

The records show that in an action filed in the Court of First Instance of Cagayan, the spouses Lino Artates and Manuela Pojas sought
annulment of the execution of a homestead1 covered by Patent No. V-12775 issued to them by the proper land authorities on 23
September 1952, and duly registered in their names (OCT No. P-572). The public sale, conducted by the Provincial Sheriff of Cagayan
on 2 June 1962, was made to satisfy a judgment against Lino Artates in the amount of P1,476.35, and awarded to Daniel Urbi by the
Justice of the Peace Court of Camilaniugan, Cagayan, in its Civil Case No. 40, for physical injuries inflicted by Artates upon Urbi on 21
October 1955. In the execution sale, the property was sold to the judgment creditor, the only bidder, for P1,476.35. In their
complaint, the plaintiffs spouses alleged that the sale of the homestead to satisfy an indebtedness of Lino Artates that accrued on 21
October 1955, violated the provision of the Public Land law exempting said property from execution for any debt contracted within
five years from the date of the issuance of the patent; that defendant Urbi, with the intention of defrauding the plaintiffs, executed on
26 June 1961 a deed for the sale of the same parcel of land to defendant Crisanto Soliven, a minor, supposedly for the sum of
P2,676.35; that as a result of the aforementioned transactions, defendants Urbi and Soliven entered into the possession of the land
and deprived plaintiffs of the owners' share in the rice crops harvested during the agricultural year 1961-1962. Plaintiffs, therefore,
prayed that the public sale of the land to defendant Urbi, as well as the deed of sale executed by the latter in favor of defendant
Soliven, be declared null and void; that defendants be ordered to deliver to plaintiffs possession of the land; and to pay to plaintiffs
compensatory damages at the rate of P1,000.00 per agricultural year until possession is finally restored to them, the sum of
P2,000.00 as damages for maliciously casting cloud upon plaintiffs' title on the land, plus attorneys' fees and costs.
The defendants2 filed separate answers disputing the averments of the complaint. On 29 March 1953, the court rendered judgment
upholding the regularity and validity of the execution conducted by the defendant Provincial Sheriff, but finding that the sale of the
lands by defendant Urbi to the minor Soliven was simulated, intended to place the property beyond the reach of the judgment debtor,
and that plaintiffs had offered to redeem the land within the 5-year period allowed by Section 119 of the Public Land law for
reacquisition thereof by the grantee. Consequently, the court declared the sale of the land by defendant Daniel Urbi to defendant
Crisanto Soliven null and void; and Daniel Urbi was ordered to reconvey the property to the plaintiffs upon the latter's payment (to
Urbi) of the sum of P1,476.35 plus the sheriff's fee incident to the sale at public auction, with interest thereon at the rate of 12% per
annum from 2 June 1961 until said amount shall have been fully paid, and the further sum of P783.45 representing the amount paid
by defendant Daniel Urbi to the Philippine National Bank for the release of the real estate mortgage on the land, contracted by Lino
Artates, with legal rate of interest thereon from 29 June 1961.

From this decision, the plaintiffs interposed the present appeal assigning several errors allegedly committed by the court below, all
hinged on the validity or invalidity of the public sale of the lot involved herein.

Section 118 of the Public Land law (Commonwealth Act 141) provides as follows:

SEC. 118. Except in favor of the Government or any of its branches, units, or institution, or legally constituted banking corporations,
lands acquired under free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the
approval of the application and for a term of five years from and after the date of issuance of the patent or grant, nor shall they
become liable to the satisfaction of any debt contracted prior to the expiration of said period, but the improvements or crops on the
land may be mortgaged or pledged to qualified persons, associations or corporations.

As thus prescribed by law, for a period of five years from the date of the government grant, lands acquired by free or homestead
patent shall not only be incapable of being encumbered or alienated except in favor of the government itself or any of its institutions
or of duly constituted banking corporations, but also, they shall not be liable to the satisfaction of any debt contracted within the said
period,3 whether or not the indebtedness shall mature during or after the prohibited time.4 This provision against the alienation or
encumbrance of public lands granted within five years from the issuance of the patent, it has been held, is mandatory;5 a sale made
in violation thereof is null and void 6 and produces no effect whatsoever. Though it may be a limitation on the right of ownership of
the grantee, the salutary purpose of the provision cannot be denied: it is to preserve and keep for the homesteader or his family the
land given to him gratuitously by the State,7 so that being a property owner, he may become and remain a contented and useful
member of our society.8

In the case at bar, the homestead patent covering the land in question (No.
V-12775) was issued to appellants on 23 September 1952, and it was sold at public auction to satisfy the civil liability of appellant
Lino Artates to Daniel Urbi, adjudged in the 14 March 1956 decision of the Justice of the Peace Court of Camalaniugan,
Cagayan.lâwphî1.ñèt There can be no doubt that the award of damages to Urbi created for Artates a civil obligation, an indebtedness,
that commenced from the date such obligation was decreed on 14 March 1956. Consequently, it is evident that it can not be enforced
against, or satisfied out of, the sale of the homestead lot acquired by appellants less than 5 years before the obligation accrued. And
this is true even if the sale involved here is not voluntary. For purposes of complying with the law, it is immaterial that the
satisfaction of the debt by the encumbrancing or alienation of the land grant made voluntarily, as in the case of an ordinary sale, or
involuntarily, such as that effected through levy on the property and consequent sale at public auction. In both instances, the spirit of
the law would have been violated.9

Doubts have been expressed as to whether the words "debt contracted prior to the expiration of said period" (of 5 years from and
after the grant) would include the civil liability arising from a crime committed by the homesteader. While there is no direct Philippine
precedent on this point, there are various reasons why the non-liability of the homestead grant should be extended to extra-
contractual obligations. First and foremost, whether it be viewed as an exemption or as a condition attached to the grant to
encourage people to settle and cultivate public land, the immunity in question is in consonance with the definite public policy
underlying these grants, which is to "preserve and keep in the family of the homesteader that portion of public land which the State
has given to him" so he may have a place to live with his family and become a happy citizen and a useful member of society, 10 and
the exemption should not be given restrictive application. 11 A levy and sale of the homestead on account of extra-contractual liability
incurred would uproot the homesteader and his family and turn them into homeless waifs as effectively as a levy for non-payment of
a contractual debt. Secondly, the word "debt" in exemption statutes,—

in its wider sense, (it) includes all that is due to a man under any form or obligation or promise, and covers not only obligations
arising under contract, but also those imposed by law without contract. 12

Considering the protective policy of the law, it becomes apparent that "debt contracted" was used in it in the sense of "obligation
incurred," since Webster gives the verb to "contract" the meaning of "to bring on; incur; acquire." Finally, our public land laws being
copied from American legislation, 13 resort to American precedents reveals that, under the weight of authority, exemption from "debts
contracted" by a homesteader has been held to include freedom from money liabilities, from torts or crimes committed by him, such
as from bigamy (State vs. O'Neil, 7 Ore. 141, 11 Words and Phrases 318) or slander (Conway vs. Sullivan, 44 Ill. 451, 452), breach of
contract (Flanagan vs. Forsythe, 50 Pac. 152, 153) or other torts (In Re Radway, 20 Fed. Cas. 154, 162).

The execution sale in this case being null and void, the possession of the land should be returned to the owners, the herein
appellants. There would even be no need to order appellee Urbi to execute a deed of reconveyance thereof to the owners. It appears
that what was issued here to the judgment creditor/purchaser was only the sheriff's provisional certificate, under which he derived no
definite title or right until the period for redemption has expired, without a redemption having been made, 14 or issuance of a final
deed or certificate of sale. In other words, the purchaser herein has not acquired an absolute ownership or title in fee over the land
that would necessitate a deed of reconveyance to revert ownership back to the appellant spouses. As things now stand, title to the
property covered by OCT No. P-572 remains with the appellants, but Lino Artates shall continue to be under obligation to satisfy the
judgment debt to Daniel Urbi in the sum of P1,476.35, with legal interest thereon accruing from the date the writ of execution was
first returned unsatisfied. It appearing also that appellee Daniel Urbi paid to the Philippine National Bank the sum of P783.45 to
release the mortgage on the land, appellants should reimburse him of said amount or of whatever amount appellants have actually
been benefited by the said payment.

FOR THE FOREGOING CONSIDERATIONS, the decision appealed from is hereby reversed, and appellants are declared entitled to the
return and possession of the lot covered by Original Certificate of Title No. P-572, without prejudice to their continuing obligation to
pay the judgment debt, and expenses connected therewith. No costs.

JOSE B. AZNAR, plaintiff-appellant, vs. RAFAEL YAPDIANGCO, defendant-appellee; TEODORO SANTOS, intervenor-appellee.
G.R. No. L-18536 March 31, 1965

The records before this Court disclose that sometime in May, 1959, Teodoro Santos advertised in two metropolitan papers the sale of
his FORD FAIRLANE 500. In the afternoon of May 28, 1959, a certain L. De Dios, claiming to be a nephew of Vicente Marella, went to
the Santos residence to answer the ad. However, Teodoro Santos was out during this call and only the latter's son, Irineo Santos,
received and talked with De Dios. The latter told the young Santos that he had come in behalf of his uncle, Vicente Marella, who was
interested to buy the advertised car.

On being informed of the above, Teodoro Santos instructed his son to see the said Vicente Marella the following day at his given
address: 1642 Crisostomo Street, Sampaloc, Manila. And so, in the morning of May 29, 1959, Irineo Santos went to the above
address. At this meeting, Marella agreed to buy the car for P14,700.00 on the understanding that the price would be paid only after
the car had been registered in his name.

Irineo Santos then fetched his father who, together with L. De Dios, went to the office of a certain Atty. Jose Padolina where the deed
of the sale for the car was executed in Marella's favor. The parties to the contract thereafter proceeded to the Motor Vehicles Office in
Quezon City where the registration of the car in Marella's name was effected. Up to this stage of the transaction, the purchased price
had not been paid.

From the Motor Vehicles Office, Teodoro Santos returned to his house. He gave the registration papers and a copy of the deed of sale
to his son, Irineo, and instructed him not to part with them until Marella shall have given the full payment for the car. Irineo Santos
and L. De Dios then proceeded to 1642 Crisostomo Street, Sampaloc, Manila where the former demanded the payment from Vicente
Marella. Marella said that the amount he had on hand then was short by some P2,000.00 and begged off to be allowed to secure the
shortage from a sister supposedly living somewhere on Azcarraga Street, also in Manila. Thereafter, he ordered L. De Dios to go to
the said sister and suggested that Irineo Santos go with him. At the same time, he requested the registration papers and the deed of
sale from Irineo Santos on the pretext that he would like to show them to his lawyer. Trusting the good faith of Marella, Irineo handed
over the same to the latter and thereupon, in the company of L. De Dios and another unidentified person, proceeded to the alleged
house of Marella's sister.

At a place on Azcarraga, Irineo Santos and L. De Dios alighted from the car and entered a house while their unidentified companion
remained in the car. Once inside, L. De Dios asked Irineo Santos to wait at the sala while he went inside a room. That was the last
that Irineo saw of him. For, after a considerable length of time waiting in vain for De Dios to return, Irineo went down to discover that
neither the car nor their unidentified companion was there anymore. Going back to the house, he inquired from a woman he saw for
L. De Dios and he was told that no such name lived or was even known therein. Whereupon, Irineo Santos rushed to 1642 Crisostomo
to see Marella. He found the house closed and Marella gone. Finally, he reported the matter to his father who promptly advised the
police authorities.

That very same day, or on the afternoon of May 29, 1959 Vicente Marella was able to sell the car in question to the plaintiff-appellant
herein, Jose B. Aznar, for P15,000.00. Insofar as the above incidents are concerned, we are bound by the factual finding of the trial
court that Jose B. Aznar acquired the said car from Vicente Marella in good faith, for a valuable consideration and without notice of
the defect appertaining to the vendor's title.

While the car in question was thus in the possession of Jose B. Aznar and while he was attending to its registration in his name,
agents of the Philippine Constabulary seized and confiscated the same in consequence of the report to them by Teodoro Santos that
the said car was unlawfully taken from him.

In due time, Jose B. Aznar filed a complaint for replevin against Captain Rafael Yapdiangco, the head of the Philippine Constabulary
unit which seized the car in question Claiming ownership of the vehicle, he prayed for its delivery to him. In the course of the
litigation, however, Teodoro Santos moved and was allowed to intervene by the lower court.

At the end of the trial, the lower court rendered a decision awarding the disputed motor vehicle to the intervenor-appellee, Teodoro
Santos. In brief, it ruled that Teodoro Santos had been unlawfully deprived of his personal property by Vicente Marella, from whom
the plaintiff-appellant traced his right. Consequently, although the plaintiff-appellant acquired the car in good faith and for a valuable
consideration from Vicente Marella, the said decision concluded, still the intervenor-appellee was entitled to its recovery on the
mandate of Article 559 of the New Civil Code which provides:

ART. 559. The possession of movable property acquired in good faith is equivalent to title. Nevertheless, one who lost any movable or
has been unlawfully deprived thereof, may recover it from the person in possession of the same.
If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale,
the owner cannot obtain its return without reimbursing the price paid therefor.

From this decision, Jose B. Aznar appeals.

The issue at bar is one and simple, to wit: Between Teodoro Santos and the plaintiff-appellant, Jose B. Aznar, who has a better right to
the possession of the disputed automobile?

We find for the intervenor-appellee, Teodoro Santos.

The plaintiff-appellant accepts that the car in question originally belonged to and was owned by the intervenor-appellee, Teodoro
Santos, and that the latter was unlawfully deprived of the same by Vicente Marella. However, the appellant contends that upon the
facts of this case, the applicable provision of the Civil Code is Article 1506 and not Article 559 as was held by the decision under
review. Article 1506 provides:

ART. 1506. Where the seller of goods has a voidable title thereto, but his, title has not been voided at the time of the sale, the buyer
acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller's defect of title.

The contention is clearly unmeritorious. Under the aforequoted provision, it is essential that the seller should have a voidable title at
least. It is very clearly inapplicable where, as in this case, the seller had no title at all.

Vicente Marella did not have any title to the property under litigation because the same was never delivered to him. He sought
ownership or acquisition of it by virtue of the contract. Vicente Marella could have acquired ownership or title to the subject matter
thereof only by the delivery or tradition of the car to him.

Under Article 712 of the Civil Code, "ownership and other real rights over property are acquired and transmitted by law, by donation,
by testate and intestate succession, and in consequence of certain contracts, by tradition." As interpreted by this Court in a host of
cases, by this provision, ownership is not transferred by contract merely but by tradition or delivery. Contracts only constitute titles or
rights to the transfer or acquisition of ownership, while delivery or tradition is the mode of accomplishing the same (Gonzales v.
Rojas, 16 Phil. 51; Ocejo, Perez and Co. v. International Bank, 37 Phil. 631, Fidelity and Deposit Co. v. Wilson, 8 Phil. 51; Kuenzle &
Streiff v. Wacke & Chandler, 14 Phil. 610; Easton v. Diaz Co., 32 Phil. 180).

For the legal acquisition and transfer of ownership and other property rights, the thing transferred must be delivered, inasmuch as,
according to settled jurisprudence, the tradition of the thing is a necessary and indispensable requisite in the acquisition of said
ownership by virtue of contract. (Walter Laston v. E. Diaz & Co. & the Provincial Sheriff of Albay, supra.)

So long as property is not delivered, the ownership over it is not transferred by contract merely but by delivery. Contracts only
constitute titles or rights to the transfer or acquisition of ownership, while delivery or tradition is the method of accomplishing the
same, the title and the method of acquiring it being different in our law. (Gonzales v. Roxas, 16 Phil. 51)

In the case on hand, the car in question was never delivered to the vendee by the vendor as to complete or consummate the transfer
of ownership by virtue of the contract. It should be recalled that while there was indeed a contract of sale between Vicente Marella
and Teodoro Santos, the former, as vendee, took possession of the subject matter thereof by stealing the same while it was in the
custody of the latter's son.

There is no adequate evidence on record as to whether Irineo Santos voluntarily delivered the key to the car to the unidentified
person who went with him and L. De Dios to the place on Azcarraga where a sister of Marella allegedly lived. But even if Irineo Santos
did, it was not the delivery contemplated by Article 712 of the Civil Code. For then, it would be indisputable that he turned it over to
the unidentified companion only so that he may drive Irineo Santos and De Dios to the said place on Azcarraga and not to vest the
title to the said vehicle to him as agent of Vicente Marella. Article 712 above contemplates that the act be coupled with the intent of
delivering the thing. (10 Manresa 132)

The lower court was correct in applying Article 559 of the Civil Code to the case at bar, for under it, the rule is to the effect that if the
owner has lost a thing, or if he has been unlawfully deprived of it, he has a right to recover it, not only from the finder, thief or robber,
but also from third persons who may have acquired it in good faith from such finder, thief or robber. The said article establishes two
exceptions to the general rule of irrevindicability, to wit, when the owner (1) has lost the thing, or (2) has been unlawfully deprived
thereof. In these cases, the possessor cannot retain the thing as against the owner, who may recover it without paying any
indemnity, except when the possessor acquired it in a public sale. (Del Rosario v. Lucena, 8 Phil. 535; Varela v. Finnick, 9 Phil. 482;
Varela v. Matute, 9 Phil. 479;

Finally, the plaintiff-appellant here contends that inasmuch as it was the intervenor-appellee who had caused the fraud to be
perpetrated by his misplaced confidence on Vicente Marella, he, the intervenor-appellee, should be made to suffer the consequences
arising therefrom, following the equitable principle to that effect. Suffice it to say in this regard that the right of the owner to recover
personal property acquired in good faith by another, is based on his being dispossessed without his consent. The common law
principle that where one of two innocent persons must suffer by a fraud perpetrated by another, the law imposes the loss upon the
party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an
express provision of the new Civil Code, specifically Article 559. Between a common law principle and a statutory provision, the latter
must prevail in this jurisdiction. (Cruz v. Pahati, supra)
UPON ALL THE FOREGOING, the instant appeal is hereby dismissed and the decision of the lower court affirmed in full. Costs against
the appellant.